Thursday, February 26, 2015

Lesson #200: Startup Success Equals Strategy AND Execution

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The right recipe for startup success requires an equal mix
of: (i) a good strategy or idea; (ii) powered by a experienced management team
that knows how to execute the plan. If
you typically have only one of the key ingredients, your startup won’t
succeed. And, in terms of ranking these
two critical elements, as I have said before, I would rather bet on an A+ team
executing a B+ idea, than a B+ team executing an A+ idea. Building startups is really hard, and the
team makes the entire difference.

Let’s bring this story to life, and look at two different startup clients
that I have worked with at Red Rocket. In these two examples, they were both being
powered by first-time CEO’s with limited prior startup experience and they both
had equally good ideas in comparable enterprise facing markets.

CASE STUDY #1

In the first example, the client engaged us to help them set
a go-to market strategy only, helping them to productize their business and
build a sales and marketing plan around growing their customer base. This client believed that once they had the
blueprint from the “architect”, that they could fill the role of “general
contractor” and build out the “house”, as an analogy. When I told the CEO, the success will come
from the execution, and that the team didn’t have the background to properly
execute the plan, their quote was “sometimes a batter needs to get up to the
plate, and take a swing on their own, without their coach batting for them”.

CASE STUDY #2

In the second example, the client not only engaged us for
the go-to-market strategy, but they also said they wanted our help with execution,
and asked us to source experienced team members to help them implement the
plan. For purposes of this discussion,
assume the go-to-market strategies were largely the same as the client in case
study #1; the only difference was the experience of the team executing the plan
in these two comparable businesses.

THE RESULTS

A year later, the company in the first case study failed to
gain traction with clients. Their
immediate instinct was the plan must have been flawed, and they basically
unwound the entire plan back to where they started. And, in that rewind, they no longer clearly
communicated what the actual strength of their business was, and even worse,
repositioned the company in an even more competitive space. Overall, revenues stayed largely flat, and
the rocket ship never took off.

As for the second company, they built up $25MM sales
pipeline in their first year (a good portion of that converted into sales,
understanding they had a long lead time product). The message resonated with the new target
clients in new target markets and the company has teed itself up for 3x revenue
growth in the next three years.

WHY THE DIFFERENCE?

In case study #2, the client understood their own strengths
and weaknesses and wanted to fill in the holes to round out their execution
team. And, in that execution team, they
were pros in enterprise sales and marketing.
They knew it was a long lead time sales cycle (and that sales would not be
immediate), they knew which individual roles inside the company the message
would best resonate (after testing many departments to see which was most
excited), they knew how to nurture these leads in a consultative process, which
was required for this product, and they held true to the plan. And, it paid off, big time.

WHAT THIS ALL MEANS FOR YOU?

Take a long look in the mirror, and the mirrors of your
fellow team members, and ask yourself this question: have the people around the management table
successfully accomplished what we are trying to accomplish in their past
roles? If the answer is yes, full steam
ahead. If the answer is no, prepare for
a lot of headwind and turbulence along the way.
The devil is always in the details, and an experienced execution team
could be the difference between a strike out and a home run, with exactly the
same idea at the plate.

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Red Rocket is your "one-stop shop" for growth: we help B2C and B2B companies with their growth strategy, execution team and financing needs. We are particularly deep in the digital technology space, but have done work across industries. We have consulted or mentored over 750 companies, to date.This blog serves as a small business executive's strategic "playbook", with actionable "how-to" lessons on a wide range of topics, including business, strategy, sales, marketing, technology, operations, human resources, finance, fund raising and more. Click the "Lessons 1-202" tab for the full list, or search by topic using the "Categories" tab.